Press Releases

NOVELLUS SYSTEMS REPORTS RECORD FOURTH QUARTER AND YEAR-END 1999 RESULTS

San Jose, Calif. -- Jan. 18, 2000 -- Novellus Systems, Inc. (Nasdaq NM: NVLS) today reported net sales and results of operations for its fiscal fourth quarter and year ended December 31, 1999. Net sales for the quarter were a record $191.7 million, an increase of 81 percent over fourth quarter 1998 net sales of $106.0 million. Net income of $33.0 million and $0.27 per share was recorded for the fourth quarter of 1999, an increase of 305 percent and 238 percent respectively, when compared to the fourth quarter 1998 net income of $8.1 million and $0.08 per share. The per share amounts are stated on a diluted basis and are adjusted for the 3-for-1 stock split that was announced on December 17, 1999 and became effective after the close of the market on January 14, 2000.

Net sales for the year were a record $592.7 million, an increase of 14.3 percent from 1998 net sales of $518.8 million. Net income for the year was $76.6 million or $0.64 per share, an increase of 45 percent and 28 percent, respectively, when compared to net income posted in 1998 of $52.8 million or $0.50 per share.

Cash and short-term investments at December 31, 1999 were $385.3 million, an increase of $31.1 million over third quarter 1999 balances of $354.2 million. Cash generation continued in the fourth quarter despite increased working capital requirements to support revenue growth.

Backlog at December 31, 1999 reached a record $329.5 million, an increase of 204 percent from the $108.5 million reported at December 31, 1998. Record bookings generated a book to bill ratio substantially greater than 1.0 to 1.0 for the fourth quarter of 1999.

Richard Hill, Chairman and Chief Executive Officer said, "We are extremely pleased with the record bookings, backlog, and revenue achieved by the Company in 1999. Semiconductor industry fundamentals continue to improve, driving our customers’ capital spending for additional capacity and advanced technology."

Hill also added, "The bookings strength of the third and fourth quarters of 1999 demonstrates our customers’ confidence in Novellus’ ability to quickly ramp production and provide innovative solutions to meet their increasing capacity expansions and advanced technology requirements. Novellus remains committed to new product development and continuous improvement of existing products to maintain our role as the industry leader for deposition technologies."

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements regarding (i) the continued improvement of semiconductor industry fundamentals, (ii) continued customer demand for additional capacity and advanced technology, (iii) the customers confidence in Novellus’ ability to quickly ramp production and provide innovative solutions to meet customer demand, and (iv) the Company’s commitment to new product development and continuous improvement, as well as other matters discussed in the news release that are not purely historical data, are forward-looking statements. The forward-looking statements involve risks and uncertainties including, but not limited to, a reversal of the favorable trend in semiconductor industry business fundamentals, a possible slowdown in new orders if the improvement in such fundamentals does not continue, and the inability of the Company’s product development efforts to continue its position as an industry leader in deposition technologies, and other risks indicated in filings with the Securities and Exchange Commission (SEC). Actual results could differ materially. Novellus assumes no obligation to update this information. For more details, please refer to Novellus’ SEC filings, including its most recent Annual Report on Form 10-K for the year ended December 31, 1998 and quarterly reports on Form 10-Q for the first three fiscal quarters of 1999.

Novellus Systems, Inc. manufactures, markets, and services advanced automated wafer fabrication systems for the deposition of thin films. Novellus deposition systems are designed for high-volume production of advanced, leading-edge semiconductors at the lowest overall cost. The Company's stock trades on the Nasdaq Stock Market's National Market under the symbol "NVLS". Additional information about the Company is available on the Novellus Systems home page on the World Wide Web, located at http://www.novellus.com.

Note: the earnings per share amounts have been adjusted for the 3-for-1 stock split effective January 14, 2000